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*Ninepoint Digital Asset Group, is a division of Ninepoint Partners LP.
(7 Day Change as of Dec 16, 2022 9:20 AM ET)
Bitcoin Price: $17,001  (1.06%)
DeFi Total-Value-Locked: $40.31B
Ethereum Price: $1,201  (5.43%)
Crypto Market Cap: $825B
Bitcoin Range: $16,907 - $18,385
BITC.U Close: $5.19 (as of Dec 15, 2022)
Ethereum Range: $1,206 - $1,352
BITC.U NAV: $5.19
Bitcoin Dominance: 41.68% 2 .40%
BITC.U Premium:  0.00

FTX’s Sam Bankman-Fried Arrested in Bahamas, Will be Extradited to the U.S. to Face Criminal Charges. SEC and CFTC Also Bring Charges

The Bahamian Authorities arrested Founder and Former FTX CEO Sam Bankman-Fried at the request of the U.S. Government on the evening of December 12th for potential charges of wire fraud, securities fraud, and money laundering. Bankman-Fried was set to testify at the U.S. Financial Service House Committee Hearing on the FTX collapse to provide answers to Members of Congress and the American people but will instead be making an appearance in Bahamian court. It’s expected that the U.S. will request Bankman-Fried’s extradition to the U.S., as they have formally filed criminal charges against him. The SEC has also brought its own set of allegations against the company for defrauding investors.

U.S. Department of Justice AML investigation into Binance Wraps Up with Uncertain Conclusion

According to Reuters, The U.S. Department of Justice is split over charging Binance regarding as part of its five-year AML investigation; some members believe sufficient evidence has surfaced to justify indictments, whereas others have cautioned for supplementary information before reaching a decision. Such a criminal prosecution has high stakes for the cryptoasset industry, considering Binance’s dominant industry position. It is unclear at this point if the investigation will end in indictments, a settlement, or a closed case with no action.

Potential Big-Name Buyer for Discounted Crypto Investments: Goldman Sachs

Goldman Sachs has emerged as a possible fire-sale buyer of heavily discounted crypto investments in the post-FTX implosion era with an estimated wallet size in the “tens of millions.” Goldman’s willingness to invest amid an industry shakeout bodes well for the continued growth and support from institutional players in the industry.

Coinbase Incentivizes USDC Conversion: A Jab at Tether (USDT)

Coinbase announced a zero-fee conversion cost to switch from USDT to a so-called “trusted stablecoin” (their word) in USDC. This campaign is a direct jab at USDT, which has been subject to its fair share of controversial rumblings surrounding its reserves. This stablecoin war between these top two stablecoins by market capitalization is rejuvenated, and it will be interesting to see if investor perception is shared at all based on this campaign.

Bitcoin’s Annus Horribilis

By Alex Tapscott

Like millions of other people, I am watching The Crown on Netflix. In one episode, which takes place at the end of 1992, the Queen delivers remarks at Guildhall commemorating the 40th anniversary of her reign. The assembled guests expect the Queen to give an uplifting speech and so are shocked when she instead makes a frank and revealing admonition about the challenges facing the monarchy and the country. In the Queen’s own words, 1992 was an “annus horribilis” – a horrible year. The line became iconic almost instantly.

Well, to use her majesty’s classically understated tone, 2022 is “not a year on which I shall look back with undiluted pleasure.” Indeed, this past year has proven to be an “annus horribilis” for investors who have found few, if any, safe harbours amidst the rough financial seas. Inflation forced the hand of central bankers, who had to jack up rates quickly to stem rising prices. Rising rates crushed bond markets, which were on pace for their worst year on record while the broad risk-off trade drove the U.S. dollar to new highs, at the expense of almost all other asset classes. Yet, in a year when the 60/40 portfolio is in tatters, with U.S. equities and treasuries down approximately 15% respectively, Bitcoin has managed to distinguish itself, falling 63% from its all-time highs to lead all major asset classes to the downside. 2022 was a reminder of Bitcoin’s volatility. Indeed, in 9 of the last 12 years, Bitcoin has been the best performing asset class, but in the other three it was the worst!

There were several reasons for Bitcoin’s poor performance, which we have covered over 2022 in this note and in our weekly podcast, DeFi Decoded. The macro headwind was compounded by the collapse of several high-profile crypto-related businesses, most notably FTX. The subsequent indiscriminate liquidation of positions and de-leveraging caused the bottom to fall out of many assets before stabilizing somewhat. As I wrote for Fortune, the FTX debacle specifically caused a huge black eye. There is much uncertainty on where we go from here. New regulation, which will almost certainly follow in the wake of recent events, may stymie the growth of the industry or provide a surer footing for long term success. Users, stung by these failures, may be slow to return to Web3’s most exciting areas, like DeFi. I recently shared my recommendations for how to put the industry on the right footing for Fortune (read here).

As readers know, I am convinced that blockchain is ushering in a new era of the internet and the web, known as Web3, which I believe promise to transform the economic power grid and the old order of human affairs for the better.

But where does that leave me vis a vis Bitcoin?

My view is that Bitcoin is the native money of the Internet. It is a community-based currency that represents one of the biggest leaps forward in computer science and monetary theory in a generation. It is a store of value and medium of exchange that enables free and lawful peer to peer exchanges of value. 2022 was a year mired by setbacks but also full of positive developments. Web3 showed its resilience and maturity as DeFi weathered the blows which knocked out centralized competitors like BlockFi and Celsius. The Ethereum Merge was successful and will help unlock greater enterprise adoption of digital assets.

I am also bullish because daily I see how investors of all sizes are steadily accumulating Bitcoin. During the absolute worst of this bear market, the number of wallets holding at least 0.01 Bitcoin has steadily hit new highs. The amount of Bitcoin on exchanges keeps hitting multi-year lows, as investors park their assets for the long run causing a supply shortage of readily tradable coins. In this week’s Quantitative Analysis section, we share data on how many mid-sized investors who hold between 1 and 10 Bitcoin has hit new highs recently as well. Individuals are acquiring Bitcoin and businesses may be next: The Financial Accounting and Stability Board proposed new accounting rules for digital assets which should come into effect in 2023, making it easier for companies to hold digital assets, which will remove a big obstacle to enterprise adoption. I recently shared my thoughts in Fortune on this important catalyst (read here).

Ultimately, we are only beginning to scratch the surface of Bitcoin and Web3’s potential. Americans and Canadians this past year got to experience the sting of high inflation, something many people all over the world have suffered with for generations. Indeed, today over 2.1 billion people are living in a country with inflation over 7 percent. Bitcoin continues to be used as a lifeline for the unbanked, and those suffering under the yoke of oppressive regimes. It is used as a store of value in countries with high inflation, like Turkey and Venezuela. It is used to fund unpopular and lawful actions like some protests and lawful but difficult to execute transactions, like funding the Ukrainian military to fight the Russian invasion. It is also the global reserve currency for a new industry and web stands to benefit from other Web3 innovation.

Sometimes the most obvious decision is the best one. Bitcoin is down 63% YTD and 77% from its all-time high. The last time this happened was 2017-2018. In 2019, Bitcoin was up 87% and led all asset classes. So if history is any guide, let’s close the books on our annus horribilis and prepare ourselves for an annus excellentis!

How a Renowned Hollywood Screenwriter Became a Web3 Entrepreneur
Hollywood screenwriter Jesse Nickson-Lopez has brought some of modern TV’s most indelible characters to life. As a founding member of the writing team on Stranger Things, she developed the storyline for the character Eleven and has written for The Outsiders, Narcos: Mexico, and other hit shows. Her next project, Lucia, will be directed by Damian Chazelle, the Academy Award-winning director of La La Land and Whiplash. At age 35, she has a résumé most writers aspire to. Despite her success, she considers screenwriting her day job. By night, she is the fco-ounder of Web3 strtup MV3. At the intersection of storytelling and technology, MV3 promises to disrupt TV, film, and the Hollywood business model itself. In this episode of DeFi Decoded, Alex and Andrew chat with Jesse and MV3 co-founder Torey Kohara about how Web3 can reimagine storytelling and the business of entertainment.
#1: Bitcoin Supply Shock Incoming? 
There are 19.23 million Bitcoin in circulation, with 78% being illiquid and 22% liquid; the staggering growth of the illiquid Bitcoin supply is important to note, which represents B stored in cold wallets off, of exchanges. This showcases a change of preferences among investors to hold and accumulate Bitcoin, which could be a potential indicator of subsiding capitulation. If this trend continues, a supply shock could emerge with heightened demand and fuel a bullish BITCOIN rally. 
#2. Bitcoin “Crab” Record-Setting Accumulation
Bitcoin owners with 1-10 Bitcoin, sometimes known as “Crabs” have been engaging in intense accumulation over the past month, having added a combined 191,600 Bitcoin to their holdings. This is an all-time high, record-setting balance increase for crabs that conquers their previous month-over-month balance increase high of 126,000 Bitcoin in the July 2022 peak.  
#3. Bitcoin Net Position Change (All Exchanges) Continues Steep Negative Trend 
The 30-day Bitcoin net position change across exchanges is down a staggering 109,956, as investors move holdings to self-custody wallets, reflecting a lack of investor confidence in centralized platforms and trust in general following the FTX implosion. Typically, this is seen as a bullish indicator as the “ready to sell” supply on exchanges diminishes as investors rather hold their Bitcoin, however this trend reflects a risk mitigation strategy of investors to safely store Bitcoin.